A huge amount of new legislation affecting the buy to let industry has either been introduced recently, is about to come into force or is being discussed at the moment. Some new rules apply to the whole of the UK, some only to Scotland and some don’t affect landlords north of the border being only applicable in England and Wales.
For the amateur landlord, especially one who doesn’t use a professional letting agency, it can be daunting and expensive to keep up with the changes.
Most of the new rules are designed to protect the tenant in a society which is increasingly seeing young people renting for much longer periods of their lives. We have a huge buy to let industry, with many landlords being part time and not professional, so legislation is necessary to keep the Private Rented Sector safe and fair for tenants. In Scotland, the new legislation being considered includes rent caps in areas that are deemed hotspots. In areas of high rents, landlords will not be able to raise the rent of sitting tenants more than one per cent over the Retail Price Index, for five years.
There have been some cries of foul over this, but if it does become law it will target the unscrupulous end of the market. Those investors in property who look to long term returns should not be overly affected and the few tenants in Scotland who are currently subjected to rent hikes mid tenancy will have protection.
A new Westminster ruling, currently going through parliament, is likely to have more far reaching negative effects.
The pilot Right to Rent scheme places responsibility for checks on the immigration status of tenants, with the threat of fines or prison if they fail to do so.
Shadow home secretary Andy Burnham has said it could lead to “widespread discrimination”. He cited figures from the Joint Council for the Welfare of Immigrants which found 42 per cent of landlords would be less likely to rent to someone who did not have a British passport while 27 per cent said “they were now reluctant even to engage with those with foreign names or accents”.
The Right to Rent scheme is a key part of the new Immigration Bill which will return to the Commons this week to be debated.
Burnham is right; landlords are not the appropriate people to be tasked with policing illegal immigration.
Talking to a friend who has a small rented flat in Glasgow, the worry caused by this legislation is already kicking in. It is close to the city centre so has always rented well, mainly to young professionals or students at Glasgow university. It became available in September and as usual, the advert drew multiple viewers. Among them were young Scots starting their first jobs in the city, as well as a United Nations of applicants connected to the university or local hospitals; Nigerians, Europeans, Chinese and even an Iraqi couple.
Faced with the possibility of being responsible for checking the immigration status of his tenant, from the raft of notes of interest, he offered the property to a young Scottish guy - a recent graduate, on a management programme with a large utility firm. The landlord’s reasons: the tenant’s circumstances means he may stay longer than the year that a post graduate would stay, his employment is secure and he was able to give his parents as guarantors. But the landlord is aware - and is suitably horrified - that one of his secondary reasons was that there was no issue with his immigration status. While he may have been able to establish a foreign tenant’s right to rent this year, as in the case of a student, he was nervous about being tasked to do so if his tenant decided to stay on.
Given possibly onerous extra checks and a choice between two or more would-be tenants, it is easy to see that many landlords will take the easier route.
It is for immigration services to police who is allowed to stay in this country. Anything else will lead to discrimination against perfectly legal tenants.